Can an employer be held liable for the theft of a client’s goods by one of its employees?

In terms of the common law, an employer can be held vicariously liable for damages caused by its employee in so far as the wrongful act/omission was committed within the course and scope of the employee’s employment, or whilst the employee was engaged in any activity reasonably incidental to such employment.

Definition:
Criminal Law, Labour and Employment Law, Litigation and Dispute Resolution.
Most employers are unaware that they can be held liable for the actions of their employees. Vicarious liability is where someone is held responsible for the actions or omissions of another.

In Fujitsu Services Score (Pty) Ltd v Schenker South Africa (Pty) Ltd (GP) (25 March 2020), the Gauteng High Court had to consider whether an employer was liable for the wrongful act committed by the employee where the said employee deviated from its scope of work. In this particular case, the employee stole certain goods of the client of its employer, which the employer had held in safe keeping for the time being.

The Supreme Court of Appeal, in Stallion Security (Pty) Limited v Van Staden (526/2018) [2019] ZASCA 127 (27 September 2019) found an employer to be vicariously liable (and ordered the employer to pay damages) where its employee had acted intentionally and “entirely for his own purposes”. The Court held that there was a sufficiently close link between the actions of the employee and the business of the employer. The employee in this case, a security guard, had been provided with an override key for the purpose of inspecting the interior of a building. He used the key to facilitate the robbery of an individual who was working late in the building.

In arriving at this decision, the Court determined that our law should be further developed to “recognise that the creation of risk of harm by an employer may, in an appropriate case, constitute a relevant consideration in giving rise to a sufficiently close link between the harm caused by the employee and the business of the employer.”

By applying these principles, the Court in the Fujitsu-judgment found that because the employee had unfettered access to the security cargo, its employer could be held vicariously liable for the damages suffered by its client as a result of the employee’s unlawful act.

These judgments place a substantial onus on the shoulders of employers (and their insurers) and should be kept in mind when planning task allocation and responsibilities for various employees.

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Article courtesy of STBB, written by Stefan Hougaard (LLB Degree)